EDITOR’S NOTE: Earlier today, KwarK uK posted a teaser. A glimpse into what he and two other players had been up to up until the release of Crucible.  Of course, there was a need to know more.  No one drops a hint that three guys made TWO TRILLION ISK off people who didn’t fully understand the mechanics of contracts – specifically that you had to do a drop down to sort by price, before you could click the tab to sort by price to actually, well, sort by price.  Here is the forums post.  Here is the blog he posted. And, for those of you who would prefer reading it here, on Eve News 24, here’s the text:

TL;DR – three people made 2 trillion isk because most people playing Eve didn’t understand the poorly laid out contracts interface. CCP finally fixed it in Crucible.

I’ve been putting off making a post regarding this for a very long time, mostly out of laziness and not giving a fuck, but I have nothing to do at work today so here goes, a brief economic history of The Hatchery.

Like an awful lot of other eve players, I started off running level 4 missions in highsec. To be specific, I missioned in Motsu for Caldari Navy and most of my income was from bounties. When my LP got too high I went to Jita, bought a few hundred thousand scourge, converted the lot of them and dumped them to buy orders. The idea of an isk/lp rate didn’t occur to me, LP was just this stuff that accumulated and I was making a little extra on the side from it.

A guy I knew said he missioned for Republic Fleet in Emolgranlan because the LP conversion (still faction ammo, this time RF medium) was better and everything else was pretty much the same. I ran the numbers and he was correct, the conversion was about twice as valuable as the old caldari navy scourge converson, while the missions were pretty much identical. On his urging I and eventually the rest of The Hatchery moved down to Emol and started missioning for Republic Fleet there.

The next change hit when a corpmate who made 7b isk from f5ing recent contracts and snatching the stacking errors and bargains retired and left a 7b legacy to the corp. I was beginning to get more involved in the selling of the RF ammo, moving it around for better prices and selling it on sell orders rather than dumping to buy orders and his isk represented the liquidity to market LP on a much greater scale. The corp had the liquidity to act as a bulk wholesaler of LP, buying large volumes of LP in cash off of corpmates for a good rate and applying economies of scale to the logistics operation of moving and selling it.

A quick note on the buying of LP. LP purchasing basically involves the buyer getting all the raw materials involved for the conversion to a convenient station belonging to the corp of the LP, trading or contracting the raw materials over to the seller who then uses a conversion of the buyer’s choice and sells the finished product to the buyer for the conversion costs + a fixed rate per LP consumed. Collateral for the raw materials is used when necessary.

The overheads of checking market hubs, freighting ammo and buying raw materials were pretty much the same for any amount of LP and soon the money was raking in, both for the missioners who could now dedicate their entire time to missioning while still getting a decent rate and for myself who was taking a relatively small commission per LP but doing it on such a large scale that I was making bank.

A little over a year ago I made this topic on the Want to Buy forums, opening my LP conversion services for the general public.
community.eveonline.com/ingameboard.asp?a=topic&threadID=1463436

The operation really started to get underway once I was doing public LP conversions. I was converting several million LP a week and taking around .3k/lp cut for myself which represented 300,000,000 per million LP. There were setbacks, such as this lossmail here (worth around 13b at the time)
teamliquid.killmail.org/?a=kill_detail&kll_id=9174015
but my net worth was skyrocketing. However elsewhere in The Hatchery others taking the LP conversion doctrine to the next level.

Another corpmate had found an LP store with a high volume LP conversion at over 3k/lp and another fairly low volume LP conversion at 10k/lp. A 10k/lp conversion meant that a fairly simple level 4 in highsec would pay over 50m in LP alone, providing you knew how to convert it. Naturally he kept this to himself for as long as he could but eventually the secret got out in corp. This was combined with a new approach to missioning called blitzing whereby the mission is completed in the fastest possible time to just get the mission reward, ignoring bounties. Those of you with a basic grasp of economics will understand opportunity cost, for those who do not I’ll explain it as simply as possible, while bounties and salvage = good doing next mission = gooder. There are still an awful lot of eve players who will argue to death that you should always salvage because that’s just money lying there in space waiting to be made whereas potential missions aren’t represented by little icons in space and therefore aren’t money waiting to be made. Anyway, returning to the story.

The secret got out and pretty soon The Hatchery was blitzing 4s like crazy. It was rapidly optimised, machariels providing by far the best missioning boat with their combination of speed, projection and damage which allowed them to hit all the triggers as quickly as possible. Missioning items such as quafe ultra, reports and the keycards were bought in bulk and allowed max LP missions such as Worlds Collide to be done in under 5 minutes. Faction standings and fleeting with other people working for the same agent allowed chain declining and very, very selective cherry picking of missions to the extent that it was pretty much never required to do anything but a blitzable mission. Those who could multibox and previously salvaged behind themselves simply started dualboxing and triboxing missions, a second account paying for itself for the month in roughly three hours of missioning. As you can imagine, the money flowed in.

I took the same role as before, acting as the liquidator for those too lazy to do it themselves and the money was staggering. If a missioner who doesn’t especially care for playing the markets wants to calculate the isk/lp of an item then assumptions such as red frog costs, raw material sell order prices and finished product buy order prices are reasonable. Each individual missioner knew that they couldn’t be bothered to run and plex a freighter account, market alts and the rest of it, it was all too much work. When I offered to convert the LP for them for a decent rate I was able to offer close to the base rate they’d get themselves and it made sense for them to take it. If it would take 20% of their PvE time to convert their LP and I offered 90% of the base value of it then they could accept that, do a few more missions in the time saved and make more isk overall. I offered a decent rate and allowed them to specialise, making more overall. Furthermore they did not need to lock up liquidity into buy orders or products on the way to the market, I paid on time, in cash, and they appreciated me for it.

However the time taken to run the LP conversions did not increase proportionately to the number of customers. It wasn’t worth the time taken to optimise conversions for a low volume of LP but when I was converting LP for dozens of people the numbers changed pretty massively. I was buying millions of LP weekly for a fixed rate of 1.5k/lp, some weeks over 10m LP, and by buying raw materials off of buy orders and looking for the best markets to sell I was getting over 3k/lp on even the lower value conversions. The result was wealth generation on an unbelievable scale across the entire corp. My customers were making 100m/hr per account and reinvested their money into buying new accounts to multiply their income further, the traditional link between age and skillpoints was broken, in The Hatchery knowledge = skill points, if you knew the tricks then near limitless wealth was at your disposal and you could simply buy the skillpoints on the character bazaar. In no game but EVE has the chasm between those who know and those who do not been so vast and in The Hatchery, we got it.

Or so we thought…

While attempting to sell the vast amount of LP goods that I was buying I ran into a corp called West and Grey who operated a mailing list buying faction modules at near market prices. It seemed too good to be true, all the effort of selling was removed, I was literally making billions from updating a few buy orders daily and setting up contracts to Red Frog. I outsourced the manufacturing, the freighting, the selling, it reached the point that I wasn’t actually doing anything other than maintaining the illusion of being needed with buzzwords such as economies of scale, opportunity cost, liquidity and so forth. Nobody else was offering the service I was offering so I operated a monopoly and to be honest, all the workers were making far too much to care how much I was profiting from their labours, they could afford all the faction battleships and accounts they wanted with ease. I had a good thing going and while I speculated with other Hatchery guys who were involved in market affairs about what exactly it was West and Grey were doing I was too arrogant, too complacent to care. We thought maybe they were selling in bulk to 0.0 alliances or just making tiny returns on selling to Jita but it wasn’t until my routune sales to them hit a 26b that I realised something was off. I was expecting it to be rejected or him to ask me to reduce the volume, instead I got a polite mail informing me that he appreciated my custom and it’d be accepted within a day or two. What the **** was this guy doing that he had 26b lying around to deal with me, just one of his great number of suppliers.

The answer was eventually discovered by Karah Serrigan (warri on teamliquid.net) and Apturan Reech (motbob on teamliquid.net) in August of 2011. Karah Serrigan was the missioner who first got into the very good LP conversions while Apturan Reech was the contracting guru who had originally donated the 7b to corp (mentioned earlier). Karah had never employed my services, selling his LP himself, while Motbob remained a contracting genius, between them they knew all the facts but it wasn’t until they were idling chatting that they chanced upon the answer. They were casually talking and Karah mentioned how sometimes his 14 day contracts got accepted near the end of their lifespan, even though there were cheaper contracts out there while Motbob mentioned while f5ing recent contracts he often saw spammed modules on 14 day contracts which were clearly overpriced. Motbob bookmarked a selection of the overpriced contracts that were nearing the end of their lifespan, all marked up by at least 30% above the real value of the module, and when he checked back a few days later sure enough, all were sold. We finally knew how West and Grey made his money, people were buying contracts off of the “Date Created (Oldest)” filter rather than the “Price (Lowest)” filter and then hitting the price button to subsort. By putting up >100 contracts at the same price on 14 day contracts he was able to get oldest to show a price of his choosing. He was operating a business that dwarved all but the likes of Somer and nobody even knew about it.

With my pride wounded and my eyes seeing dollar signs I had to try and get in on the action. Unfortunately, despite being absurdly wealthy by the standards of most EVE player West and Grey made me look poor. Subsequent discussions with him revealed that at any given time he had almost a trillion invested in stock, buy orders and cash for operating his mailing list, his mailing list was old, established and had a loyal supplier base who were as complacent as I had been and would be difficult to tempt away. With hundreds of alt characters putting up contracts his market saturation was near complete and the task ahead of me was seemed insurmountable. Fortunately my corpmates in The Hatchery were able to loan me around 130b in uncollateralised isk to fund my challenge (with interest generally sitting at about 1% compounding weekly) and West and Grey took a two week holiday just as I was raising my standard. I seized my luck and attacked.

The market was extremely difficult to break into because there simply is no bulk of cheap modules on the market. Conventional logic dictates that buying in bulk commands a discounted price compared to smaller orders because the seller wants to sell as much as he can as easily as possible. However we were talking hundreds of modules daily and the market on contracts (price lowest) has no real depth, the lowest priced contract got very expensive very quickly if you were looking to buy in bulk and there simply weren’t enough to get the volume of modules needed on the market.

There are two things that should be noted here. Firstly, the scale of the Date Created (Oldest) market actually massively suppressed the value of modules on Price (Lowest). A vast number of people were buying off of the oldest while pretty much all the sellers, being competent market individuals, sold theirs at lowest. The result was that they couldn’t find buyers and .01ed each other down, artificially deflating the value of the module. Secondly, the importance of the mailing list. Bulk module producers did not want the hassle of dealing with selling on price lowest and they knew that price lowest could not handle their supply, although they did not know why. Once they found the West and Grey mailing list (Faction Trade for those who are curious) they stopped looking at the market and were content to sell at prices just a little under price lowest (bulk discount lol). Suppliers were the key to the entire operation and had they been aware of the value that their stock commanded they could easily have demanded 20% above “market price”, however everyone knows that when you buy in bulk you get a discount and in the market, perception is everything.

I was fortunate enough to have a decent supply of stock from my own corp and while it wasn’t enough to take over the market it did allow me to rapidly increase my capital, operating at 50% returns every 14 days. I also experimented with the limits of how far I could push the price, feeling that West and Grey were wasting money with their conservative 30% markup and doing trial runs with over 100% markup. The volume sold was lower but it was still possible to sell them, much to the disbelief of those who knew about it. It appeared that to a lot of the market the shown price was the price and the actual number didn’t matter, if that was what sorting the first hundred contracts by price showed as lowest then that was good enough for them. People just wanted to pimp their ships, whether the increase in the utility of the ship represented value for money is irrelevant, in EVE people are magpies, they just like shiny things. However I was still having trouble getting supply. I set up my own want to buy contracts with advertisements for my own mailing list (faction wholesale) in the description which was a blatant rip off from West and Grey but I had limited success, the ones who would notice that kind of thing had already noticed it when he’d done it and no longer looked at want to buy contracts. There was a remarkable number of people who simply sold to my want to buy offers without checking my mailing list in which better prices were offered, if they’d read the description and taken a look they could sell their modules to a mailing list buy order for more but the somehow the basic Want to Buys kept getting filled. I made a post on the Want to Buy forums advertising my mailing list and saying what I was buying, I trawled the Sell forums for sellers, I spammed the inboxes of random people who were selling more than 5 of the same module on lowest, all in an effort to build up my own network of suppliers to rival West and Grey’s. Slowly but steadily it grew, still smaller than his but an increasingly legitimate challenge to his operation.

+ Show Spoiler [Massively complicated theory, skip if…] +

West and Grey and I fought each other with ever decreasing windows and increasing saturation. The early days of insane returns in % disappeared as I was forced to sink more and more isk into stock just to match his frequency with blockers and he successfully forced me out of several markets. Furthermore his advantage in supply became more and more pronounced as he made the contest about the volume of stock which could be placed upon the market, if I were to snipe his window on one day I might simply lack the stock to snipe a better window several days later. My fledgling mailing list needed stability, I needed to maintain the illusion that I could always buy and would always pay promptly, even when I couldn’t and that was another drain on my liquidity, although it was an investment in my future.

However it wasn’t all bad news. West and Grey was by no means perfect, there were markets he’d left untouched. I found one of these and immediately threw myself into it and, with no rival to set the base profit margin, quickly implemented a markup of over 100%. The gamble paid off and the stock sold. WG immediately responded by buying up the price lowest market with a ridiculous amount of liquidity, furnishing himself with a stockpile overnight in an arms race that has left the module in question still 50% above its real value to this day. It’s always been amusing to me that there are no more people putting the module on ships, nor more people making them, the reason the price is what it is is because of a spike in demand for ammunition in a trade war which has stayed high since then due to public perception of value. Although we fought over every module I was able to retain a stronger market share in some, like the one evasively mentioned in this paragraph, although others I was completely unable to break into.

On the 22nd of November West and Grey finally contacted me on his main market account (I still don’t know his main main) and arranged a meeting. We discussed prices, selling of market shares, setting of windows and the like and although the war went on we agreed to fight it out at a higher price. While we didn’t stop attacking each others’ windows I was able to convince him that his markup was conservative and that the data from my absurdly overpriced trial runs suggested that an 80% markup per module was perfectly feasible.

By this point I was operating around twenty accounts with three characters on each, sending myself 21 day trials with the reward of a plex and using a plex to subscribe them to generate free 51 day subscribed accounts. Profits were good and although it had become a chore the money was subtantial. I had handed over my old LP business to corpmates and WGing had become a Hatchery business, a public secret that somehow remained in corp. I had more isk than I could ever want and it was simply for the joy of the PvP that I kept doing it, this wasn’t simply .01ing buy orders in Jita, I fought constantly against a guy with weapons and knowledge comparable to my own with the stakes in the hundreds of billions.

Four days before Christmas West and Grey asked to talk again. He said he’d had enough of running it all and wanted to sell me a monopoly. It was a little too much for me to run but I got a few other WGers from The Hatchery involved to help fund and run it and we eventually hammered out some terms. I’m not going to post the exact contract but it consisted of a liquidation of his stock to the value of approximately 400b cash and a 9b weekly pension in exchange for a monopoly, the passing of his mailing list suppliers to me and his silence. I wouldn’t call it a victory in the WGing wars but for the first time, the monopoly was mine.

The honeymoon ended very quickly, I lacked the liquidity and the infrastructure to become WG. For the first time I saw first hand exactly how large his operation was. I was a snake trying to swallow a crocodile whole and it was painful. While the giant increase in volume was mitigated by the ability to increase the length of windows, sell blockers to corpmates and by working as a cartel I struggled daily to remain liquid. I increased my uncollateralised debt to 150b and had a lot of trouble keeping up with the huge supply that our combined mailing lists exposed me to. Furthermore other WGers, notably the MD forums own Tanith Yarndemon, leapt upon my longer windows like vultures and I couldn’t afford to let any of my suppliers lapse lest they go to him. I was still in a hugely advantageous position, I had the mailing list, I had the suppliers without whom rivals were impotent and the value of my operation had increased to an unbelievable size it was still tough. I was engaged in constant warfare with rival WGers and while I had the liquidity and the stock to bully them with intense saturation and aggressive cancelling it was damaging to me too. I maintained the bluff that I had infinite liquidity, infinite contract slots, infinite stock and vigourously defended my monopolies on the key markets while begging for isk wherever I could, mortgaging spare stock and letting down WG. I failed to upkeep my end of the bargain and was forced to renegotiate out of poverty, a particularly low moment. My corpmates struggled under the same pressures and some cracks appeared in the facade where I often simply lacked the capacity to cover for them when they left windows open to be sniped by rivals or failed to make a prompt payment. Furthermore a few of my more rapacious corpmates who fully understood how WGing worked took advantage of their knowledge to use me as a blocker or supply my rivals, wanting their own slice of the pie (although if you’ve read how I took advantage of them to make my first fortune I expect no pity). Rival WGers were getting stronger and more aware and while most of them were still stupid, able to be abused and used as blockers while denying them their windows, they grew as I had grown against the original West and Grey. Topics such as this
forums.eveonline.com/default.aspx?g=posts&t=56838
were made and posed new threats although the guy who made that topic went about it in an incredibly stupid way and I was able to damage control it decently.

While I mention these problems it should be stressed that these are the issues I ran into while attempting to run a trillion isk operation which was generating returns that rivalled tech moons and personal income that made entire alliances look poor. I dedicated around 240b to a single core market and was able to absolutely dominate it, driving out the opposition with total saturation and then exploiting my total market share with overlapping contracts to get an incredibly efficient income on a 70% markup which was worth about 7b profit daily and around 25b every weekend. My consolidation on the core markets had allowed rivals to eat away at the fringes but without the need to pour my returns into shoring up my defences I was free to go on the offence on their markets and by the middle of January I was secure in a market position even WG had never had (due to my existence) and was pushing frontiers he had never pushed. Then, out of nowhere, Crucible 1.1 happened and it was all over.
forums.eveonline.com/default.aspx?g=posts&t=54266

West and Greying died without CCP even knowing of its existence, killed by CCP Atlas who happened to read a topic and slipped it into the patch. With a sigh of relief I allowed around 35 accounts (105 characters) to expire and liquidated. Since then I have lived a life of leisure, PvPing constantly and indulging in character trading whenever I get the itch to do something with my money. I have repaid debt to the tune of 160b to Hatchery corpmates (whose interest payments gouged me ) and not done anything PvE related since.

And that concludes my history of how The Hatchery won EVE, how I made my wealth, how West and Grey invented one of the most impressive ways to redirect isk to his wallet in EVE history and how it all happened.

Feel free to ask any questions below.

Things to muse upon.
God I love incursions.Those guys love to pimp their PvE ships. Also no players have done more to damage the isk generation of incursions than the WGers who were kind enough to redirect it all to their own pockets.
The existence of West and Greying artifically suppressed the price lowest price by redirecting substantial amount of demand elsewhere. A large majority of people were incredibly happy buying ballistic controls for 165 each, the only reason the price hasn’t soared is due to the memory of the market and that perception of value is the most significant factor dictating price. It was always amusing to me that should CCP ever patch it I wouldn’t go bankrupt, the value of all the stock I was holding would actually increase as price lowest got exposed to the full demand of the market while the bulk suppliers who didn’t want to do market stuff looked elsewhere to make their isk.

TL’DR

TL;DR – three people made 2 trillion isk because most people playing Eve didn’t understand the poorly laid out contracts interface. CCP finally fixed it in Crucible.

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