@trengriffin has some fascinating tweets on the economics of software companies that speak to this. This is my favorite: There is no place in financial accou

@trengriffin has some fascinating tweets on the economics of software companies that speak to this. This is my favorite: There is no place in financial accounting for the concept of network effects, or the increase in the value of a resource with its use. This actually implies negative depreciation expense in accounting parlance. the fundamental idea behind the success of digital companies (increasing returns to scale) goes against a basic tenet of financial accounting (assets depreciate with use). For digital companies, the bulk of the cost of building an idea-based platform is reported as an expense https://hbr.org/2018/02/why-financial-statements-dont-work-for-digital-companies https://hbr.org/2018/02/why-financial-statements-dont-work-f... https://twitter.com/trengriffin/status/969042566019612677 https://twitter.com/trengriffin/status/969042566019612677